Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


NZ dollar gains after Fonterra moves payout forecast

NZ dollar gains after Fonterra moves payout forecast

By Jonathan Underhill

Sept. 24 (BusinessDesk) - The New Zealand dollar rose after Fonterra Cooperative Group lifted its forecast payout to farmers, reducing the prospects of the rural sector slowing the economy, and after China's Guoxin International Co committed to raising some $3 billion to invest in the rebuild of Christchurch.

The kiwi rose to 62.91 US cents as at 5pm in Wellington, from 62.63 cents late yesterday. The trade-weighted index rose to 68.67 from 68.19 immediately before the Fonterra announcement and from 68.25 yesterday.

Fonterra chairman John Wilson said a stronger performance in the second half was continuing into the current year and the cooperative raised its forecast farmgate milk price to $4.60 per kilogram of milk solids from a decade-low $3.85/kgMS, projecting a total payout including per-share earnings of $5-to-$5.10/kgMS for the 2015/16 year. Dairy products are the nation's biggest export and the fortunes of rural communities tend to rose and fall with farmer incomes, feeding into the wider economy. Guoxin's investment plans had also lifted sentiment, traders said.

"Sentiment for the kiwi has been positive for the past couple of days" on the Guoxin announcement and Fonterra's payout forecast," said Sue Trinh, senior currency strategist at RBC Capital Markets in Hong Kong. The kiwi has been strong at a time risk appetite in the foreign exchange market is "somewhat limp."

Still, the bias is still for a lower New Zealand dollar, "that is predicated on the US dollar rally continuing," she said. "Clearly there are question marks on the timing of a Fed rate hike" which is now expected in December.

Meanwhile, "we're still looking for the Reserve Bank of New Zealand to cut rates further - which is arguably priced in already," Trinh said. "We really need to see further weakness in the domestic economy and in trading partner growth to back that up."

The kiwi didn't move much after government figures showed New Zealand’s trade deficit widened in August to $1.04 billion from a shortfall of $465 million a year earlier, mainly driven by one-off imports of aircraft, which offset stronger international meat sales that drove export growth to a record for the month.

The local currency rose to 89.93 Australian cents from 89.05 cents yesterday, gained to 75.58 yen from 74.99 yen and rose to 41.26 British pence from 40.80 pence. The local currency rose to 4.0148 yuan from 3.9958 yuan, and was little changed at 56.23 euro cents from 56.21 cents yesterday.

The two-year swap rate rose 1 basis point to 2.68 percent. The five-year swap rate rose 3 basis points to 3.02 percent and 10-year swaps rose 3 basis points to 3.52 percent.


© Scoop Media

Business Headlines | Sci-Tech Headlines


NZTA: Major New Zealand Upgrade Programme Projects Go To Tender

Two major New Zealand Upgrade Programme projects are beginning tenders for construction. The New Zealand Upgrade Programme is a $6.8 billion investment to get our cities moving, to save lives and boost productivity in growth areas. The first Auckland ... More>>

Reserve Bank: RBNZ Seeks To Preserve Benefits Of Cash

The Reserve Bank – Te Pūtea Matua is taking on a new role of steward of the cash system “to preserve the benefits of cash for all who need them”, Assistant Governor Christian Hawkesby told the Royal Numismatics Society of New Zealand annual conference ... More>>


Economy: Double-Dip Recession Next Year, But Housing Rolls On

New Zealand's economy is expected to slip back into recession early next year as delayed job losses, falling consumer spending, and the absence of international tourists bites into growth. More>>


Microsoft New Zealand: Microsoft Expands “Highway To A Hundred Unicorns” Initiative To Support Startups In Asia Pacific

New Zealand, 14 October 2020 – Today Microsoft for Startups launches the Highway to a Hundred Unicorns initiative in Asia Pacific to strengthen the region’s startup ecosystem. This follows the initiative’s success in India, where 56 startups were ... More>>

Fonterra: Farmers Taking Another Step Towards New Zealand’s Low Emissions Food Production

They’re hot off the press and intended to help take the heat out of climate change. Fonterra farmers are already among the world’s most sustainable producers of milk and now have an additional tool in their sustainability toolbox. Over the last few ... More>>


Electricity: New Zealand Remains In Top 10 For Energy Balance

The World Energy Council’s Energy Trilemma Index has become part of the energy dialogue both globally and in New Zealand. The Index illustrates the need for countries to balance energy security, energy equity and environmental sustainability. New Zealand ... More>>


Courts: Businessman Eric Watson Sentenced To A Four-Month Jail Term

New Zealand businessman Eric Watson has been sentenced to a four-month jail term in the UK for contempt of court, TVNZ reports. More>>

OECD: Area Employment Rate Falls By 4.0 Percentage Points, To 64.6% In Second Quarter Of 2020

The OECD area employment rate – the share of the working-age population with jobs – fell by 4.0 percentage points, to 64.6%, in the second quarter of 2020, its lowest level since the fourth quarter of 2010. Across the OECD area, 560 million persons ... More>>

Spark: Turns On 5G In Auckland And Offers A Glimpse Into The Future Of Smart Cities

Spark turned on 5G in downtown Auckland today and has partnered with Auckland Transport (AT) to showcase some of the latest in IoT (Internet of Things) technology and demonstrate what the future could look like for Auckland’s CBD with the power of 5G. 5G is ... More>>

Stats NZ: Monthly Migration Remains Low

Since the border closed in late-March 2020, net migration has averaged about 300 a month, Stats NZ said today. In the five months from April to August 2020, overall net migration was provisionally estimated at 1,700. This was made up of a net gain ... More>>

University of Canterbury: Proglacial Lakes Are Accelerating Glacier Ice Loss

Lake Tasman, New Zealand | 2016 | Photo: Dr Jenna Sutherland Meltwater lakes that form at glacier margins cause ice to recede much further and faster compared to glaciers that terminate on land, according to a new study. But the effects of these glacial ... More>>


Dairy: Fonterra Sells China Farms

Fonterra has agreed to sell its China farms for a total of $555 million (RMB 2.5 billion*1), after successfully developing the farms alongside local partners. Inner Mongolia Natural Dairy Co., Ltd, a subsidiary of China Youran Dairy Group Limited ... More>>